Valuation Provisions within Buy-Sell Agreements

Presented by CapVal’s Jane Tereba, ASA, CPA, CEPA

Attorneys draft buy-sell or operating agreements regularly for their business owning clients.  But what about those paragraphs dealing with the valuation provisions?  How will the business be valued? These become the most critical paragraphs when a triggering event occurs, and triggering events include far more than just death or disability of an owner.  Ultimately, an agreement between business owners should reflect the owners’ intent—which means boilerplate language does not work.  In this course we will cover why such phrases as “Fair Market Value” and “Book Value” are not sufficient direction to a business appraiser and why formulas don’t work.  We will share a matrix our firm has developed for determining the intent of the owners under all six triggering events so attorneys can easily insert unambiguous valuation provisions into these important agreements. 

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